Hi Traders!
Forex Weekly Recap for 17–21 July, 2023:
Fundamentals
The Reserve Bank of Australia (RBA) released its meeting minutes, and the key notes were:
Considered holding rates steady or hiking by 25 basis points.
Noted the squeeze on household finances and the risk that unemployment could rise more than needed.
Inverted yield curve pointed to tighter conditions, slowing growth.
The labour market is very tight, with weak productivity adding to labour costs.
Annual wage growth is seen rising to 4% in Q3.
Consumer spending is currently weak in Q2. A rebound in the housing market will support consumption.
European Central Bank member Knot noted that rate hikes past July are possible; however, it is not certain as it looks like core inflation has steadied. Knot noted that he is optimistic to see inflation reaching their 2% target in 2024 but added that there is still a lot of key economic data due to be released between now and September.
Bank of Japan (BoJ) Governor Ueda noted that there is still some way to go for the economy to sustainably achieve the 2% inflation target and that unless their assumption on the need to sustainably achieve the target changes, their narrative on monetary policy will not change.
Bank of England (BoE) member Ramsden noted that the CPI at 7.9% is still too high despite falling significantly. He also confirmed that he "cannot rule out that the next interest rate cycle will get back to the lower bound and need to have room for new quantitative easing."
Rumours coming out of Japan noted that the BoJ is leaning towards keeping yield curve control (YCC) steady next week, citing five sources familiar with the central bank’s thinking as policymakers prefer to scrutinise more data to ensure wages and inflation keep rising. This resulted in Yen weakness, and the currency sold off against its counterparts following the news.
Key Data
US Retail Sales came in worse at 0.2% vs. 0.5% expected and 0.5% prior (revised from 0.3%).
Canadian CPI Y/Y came in at 2.8% vs. 3.0% expected and 3.4% prior, while the M/M number also came in at 0.1% vs. 0.3% expected and 0.4% prior.
New Zealand's Q2 CPI Q/Q came in at 1.1% vs. 1.0% expected and 1.2% prior. The Y/Y number came in at 6.0%, vs. 5.9% expected and 6.7% prior.
The UK June CPI Y/Y came in at 7.9% vs. 8.2% expected and 8.7% prior, while the M/M number came in at 0.1% vs. 0.4% expected and 0.7% prior.
US Housing Starts came in worse at 1434 million vs. 1480 million expected and 1559 million prior (revised from 1631 million). Building Permits also came in worse at 1440 million vs. 1490 million expected and 1491 million prior.
The Australian Jobs Report came in better at 32.6K jobs added vs. 15K expected and 75.9K prior. The unemployment rate also came in better at 3.5% vs. 3.6% expected and 3.6% prior.
Japan’s Government increased their inflation forecasts for the Fiscal year 2023–2024 to 2.6% vs. 1.7% prior.
The US Philly Fed Manufacturing Index came in at -13.5 vs. -10.0 expected and -13.7 prior.
US Initial Jobless Claims came in better at 228K vs. 242K expected and 237K prior.
Japan's CPI Y/Y came in at 3.3% vs. 3.5% expected and 3.2% prior. Core inflation in Japan is at a 40-year high.
UK June Retail Sales M/M came in better at 0.7% vs. 0.2% expected and 0.1% prior (revised from 0.3%).
Canada's May Retail Sales came in worse at 0.2% vs. 0.5% expected and 1.0% prior (revised from 1.1%).
Technicals
The US dollar rebounded strongly this week against its major counterparts.
AUDUSD 1W Chart
AUDUSD is now ranging and looking for a direction to continue in. We are still in the symmetrical triangle and have now formed a range zone within the triangle, looking for a breakout to either side.
USDJPY 1W Chart
USDJPY is on a retracement wave from the recent bearish momentum; the market is back above the 140 level. The market bounced off our support at 137.915, which is the area we had the previous bullish breakout from. Next week is very important; if the Yen's weakness continues, the 145.073 resistance level will be the next target.
EURUSD 1W Chart
EURUSD is now retracing the impulsive wave we have had over the past month and a half. There was price rejection at 1.12757, and it is looking to retest the 1.10956 level as support.
GBPUSD 1W Chart
GBPUSD is back under the 1.30000 level and is currently trading around 1.28500. The market is still in an ascending price channel, with the price action showing consistent higher highs and higher lows. If we get a break and close below the price channel, there is support at 1.24486.
The key focus for the upcoming trading week will be:
Monday: US Services PMI and Global PMIs
Tuesday: US CB Consumer Confidence
Wednesday: Federal Reserve Rate Decision
Thursday: ECB Rate Decision, US Jobless Claims, US GDP
Friday: BoJ Press Conference
We will be back with another Forex Weekly Recap report next week.
Best of luck for the trading week ahead. Trade safely and responsibly.
BluetonaFX
Forex Weekly Recap for 17–21 July, 2023:
Fundamentals
The Reserve Bank of Australia (RBA) released its meeting minutes, and the key notes were:
Considered holding rates steady or hiking by 25 basis points.
Noted the squeeze on household finances and the risk that unemployment could rise more than needed.
Inverted yield curve pointed to tighter conditions, slowing growth.
The labour market is very tight, with weak productivity adding to labour costs.
Annual wage growth is seen rising to 4% in Q3.
Consumer spending is currently weak in Q2. A rebound in the housing market will support consumption.
European Central Bank member Knot noted that rate hikes past July are possible; however, it is not certain as it looks like core inflation has steadied. Knot noted that he is optimistic to see inflation reaching their 2% target in 2024 but added that there is still a lot of key economic data due to be released between now and September.
Bank of Japan (BoJ) Governor Ueda noted that there is still some way to go for the economy to sustainably achieve the 2% inflation target and that unless their assumption on the need to sustainably achieve the target changes, their narrative on monetary policy will not change.
Bank of England (BoE) member Ramsden noted that the CPI at 7.9% is still too high despite falling significantly. He also confirmed that he "cannot rule out that the next interest rate cycle will get back to the lower bound and need to have room for new quantitative easing."
Rumours coming out of Japan noted that the BoJ is leaning towards keeping yield curve control (YCC) steady next week, citing five sources familiar with the central bank’s thinking as policymakers prefer to scrutinise more data to ensure wages and inflation keep rising. This resulted in Yen weakness, and the currency sold off against its counterparts following the news.
Key Data
US Retail Sales came in worse at 0.2% vs. 0.5% expected and 0.5% prior (revised from 0.3%).
Canadian CPI Y/Y came in at 2.8% vs. 3.0% expected and 3.4% prior, while the M/M number also came in at 0.1% vs. 0.3% expected and 0.4% prior.
New Zealand's Q2 CPI Q/Q came in at 1.1% vs. 1.0% expected and 1.2% prior. The Y/Y number came in at 6.0%, vs. 5.9% expected and 6.7% prior.
The UK June CPI Y/Y came in at 7.9% vs. 8.2% expected and 8.7% prior, while the M/M number came in at 0.1% vs. 0.4% expected and 0.7% prior.
US Housing Starts came in worse at 1434 million vs. 1480 million expected and 1559 million prior (revised from 1631 million). Building Permits also came in worse at 1440 million vs. 1490 million expected and 1491 million prior.
The Australian Jobs Report came in better at 32.6K jobs added vs. 15K expected and 75.9K prior. The unemployment rate also came in better at 3.5% vs. 3.6% expected and 3.6% prior.
Japan’s Government increased their inflation forecasts for the Fiscal year 2023–2024 to 2.6% vs. 1.7% prior.
The US Philly Fed Manufacturing Index came in at -13.5 vs. -10.0 expected and -13.7 prior.
US Initial Jobless Claims came in better at 228K vs. 242K expected and 237K prior.
Japan's CPI Y/Y came in at 3.3% vs. 3.5% expected and 3.2% prior. Core inflation in Japan is at a 40-year high.
UK June Retail Sales M/M came in better at 0.7% vs. 0.2% expected and 0.1% prior (revised from 0.3%).
Canada's May Retail Sales came in worse at 0.2% vs. 0.5% expected and 1.0% prior (revised from 1.1%).
Technicals
The US dollar rebounded strongly this week against its major counterparts.
AUDUSD 1W Chart
USDJPY 1W Chart
EURUSD 1W Chart
GBPUSD 1W Chart
The key focus for the upcoming trading week will be:
Monday: US Services PMI and Global PMIs
Tuesday: US CB Consumer Confidence
Wednesday: Federal Reserve Rate Decision
Thursday: ECB Rate Decision, US Jobless Claims, US GDP
Friday: BoJ Press Conference
We will be back with another Forex Weekly Recap report next week.
Best of luck for the trading week ahead. Trade safely and responsibly.
BluetonaFX